Watch Out, Pacific Biosciences Stock Is Very Extended

This candlestick pattern is very successful in catching significant tops.

What does JIm Cramer think about Pacific Biosciences of California (PACB) ? "This is one of the most speculative stocks in the market. I can't tell you to buy it up here. It's moved too much," Cramer told one caller during the Lightning Round of Mad Money Tuesday night.

The company provides "sophisticated genomic analysis systems that deliver insights to resolve complex genetic challenges." This is way above my pay grade so I will just stick to the charts. 

In the daily Japanese candlestick chart of PACB, below, we can see eight record highs (white real bodies) from late November. I have found over the years that this candlestick pattern is very successful in catching significant tops. Prices are still above the rising 50-day moving average line but times the level of the rising 200-day moving average. I would consider this extended above the 200-day line.

The On-Balance-Volume (OBV) is still bullish as is the Moving Average Convergence Divergence (MACD) oscillator.  

 

In this weekly Japanese candlestick chart of PACB, below, we can see a seven-fold advance in less than a year. Incredible. Prices are above the rising 40-week moving average line with a bullish OBV line and MACD oscillator.  

 

 

In this daily Point and Figure chart of PACB, below, we can see a potential upside price target in the $39 area. 

 

 

Bottom-line strategy: Maybe in 2021 PACB goes on to rally to $39 but in the here and now when a stock is trading at three times its 200-day moving average line it is a clear message that prices are overbought/extended. Buyer beware!

 

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